These leading emerging economies represent a combined pharmaceutical market of US$127 billion. How have they emerged from the economic downturn? Where do commercial opportunities exist for pharmaceutical companies over the 2011-16 forecast period?

Putting things in perspective...

With strong economic growth, a combined population of 2.9 billion people and significant unmet healthcare needs, challenges and opportunities remain in BRIC pharmaceutical markets. Their combined market, including pharmacy and hospital sales, is valued at US$127.0 billion at retail prices. This market is collectively lower than that found in leading markets such as the USA and Japan, but impressive growth rates mean that pharmaceutical companies should have long-term interests in these markets. China, in fact, is expected to become the second leading worldwide pharmaceutical market by 2016.

Sizeable opportunities exist …

There are wide regional health expenditure differences within the BRIC markets, far more than in developed countries where health systems provide a more uniform coverage level. These four countries have a relatively wealthy urban population with a far greater spending power than their respective national average. In the case of China and India, these urban populations have grown rapidly, and number hundreds of millions. The challenge for these countries is to extend this level of wealth to the rest of the population, so that better levels of healthcare become affordable. China, for instance, plans to create a solid platform for universal healthcare access for all by 2020.

A long haul...

Pharmaceutical market growth has increased since the economic downturn in 2009. Market change, however, is expected to be incremental. Short-term opportunities exist to meet the health demands of the burgeoning middle classes, whilst future prospects are bright, fuelled by strong economic performance. An impressive pharmaceutical market growth projected in BRIC markets is expected to erode some of the commercial differences with the established, but more sluggish, pharmaceutical markets in North America, Japan and Europe. Only Brazil is expected to have a low market CAGR in US dollar terms over the 2011-2016 period, due to a weaker local currency over the period.

HIGHLIGHTS FROM THE REGION...

BRAZILThe Brazilian pharmaceutical market is the third largest in the Americas region, behind the USA and Canada; it ranks first in the Latin American region. Pharmaceutical demand will continue to increase as the country emerged from the economic downturn in 2009, therefore the market outlook is positive for the 2011-2016 period. Higher consumption of patented and bioequivalent medicines in Brazil will continue, replacing consumption of similar medicines. Generics sales in Brazil, which represented 17.2% of the pharmacy sector by value and 21.3% by volume in 2010, are expected to continue to grow at a higher rate than the overall pharmacy sector. Recent acquisitions of local generic companies by major foreign multinationals have changed the shape of the generic sector, with multinationals now accounting for about 40.0% of the sector.

RUSSIARussia accounts for just under a third of the total Central & Eastern European pharmaceutical market, due to its population of 142 million; however, in per capita terms, Russia is also one of the smallest markets, comparing to Romania. The Russian pharmaceutical market is predicted to expand at a relatively high CAGR in US dollar terms over the next few years and will continue to be driven by import growth; a heavy reliance on imports has resulted from the lack of locally-manufactured innovative pharmaceuticals. Over the last few years, import growth has been boosted by the federal drug supply system (DLO). Around 80% of DLO funds are spent on imported pharmaceuticals. The government is currently implementing the Pharma 2020 Strategy, which aims to encourage growth in the local pharmaceutical industry for the period up to 2020.

INDIATThe Indian pharmaceutical market is highly competitive and remains dominated by low priced, domestically-produced generics. Despite having the second largest population in the world and a growing middle class with high healthcare expectations, India accounts for less than 2% of the world pharmaceutical market in value terms. In one of the world’s better performing economies, spending on pharmaceuticals accounts for less than 1% of GDP and average per capita spending remains one of the lowest levels in the region. The Indian pharmaceutical industry is responsible for around 8% of world pharmaceutical production. Over the last couple of years, Indian pharmaceutical companies have been increasingly targeted by multinationals for both collaborative agreements and acquisitions. The biopharmaceutical sector in India is currently experiencing double digit growth and this is expected to continue, driven by the vaccines market.

CHINAThe MoH has made lower drug prices a top priority for health authorities in 2011. In January 2011, the MoH announced that the Essential Drugs List will be further expanded to cover nearly all government-sponsored grass-roots health institutions. The MoH will also focus on streamlining the centralised procurement and distribution of essential drugs, to bring down drug prices at the supply end and thus lower drug prices for patients. In December 2010, National Development and Reform Commission (NDRC) deputy director Zhu Zhixin reported that preliminary statistics showed the prices of basic medicines had dropped by nearly a third, since the implementation of the Essential Drugs List in August 2009. In November 2010, it was reported that the NDRC was planning to reduce the price of original research drugs, which are mostly manufactured by foreigncompanies and are normally eligible for independent pricing.

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The Market for Pharmaceuticals in Brazil, Russia, India and ChinaMore Information...4 Markets Covered

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